.

It is less and less common nowadays for international audiences to hear the words “diplomacy” and “Italy” spoken in the same sentence. Derailed from the subtle and prudent pursuit of international affairs that still constitutes much of the commonsense stereotype of the diplomat through a series of mishaps, clumsy incidents and poor international standing of some the key figures representing the ‘Bel Paese’, Italian diplomacy has become, at best, an oxymoron.

Certainly crucial in this discredited image is the recognizable imprint of the country’s long-serving leader, Silvio Berlusconi, and the innumerable list of gaffes, jokes and blunders the center-right politician displayed on the international scenario. Perhaps best representing this evolving international feeling towards Italy is German Chancellor Angela Merkel’s reaction to the now famous ‘surprise’ welcome offered by Berlusconi at a Summit in Trieste in 2008: when the Italian head of state hid behind a lamp only to jump in front of a bedazzled Chancellor at the very last minute boasting a macaronic “peek-a-boo”, Mrs. Merkel resorted to a resigned “Oh, Silvio!” in return. Shaky patience, complacent acquiescence and a touch of skepticism has often accompanied the reactions of countless foreign dignitaries when faced with a conduct of foreign relations that so much differs from Sir Ernst Satow’s 1917 prescriptions that illustrated diplomacy as the “application of intelligence and tact” to international relations. When in 2009 Mr. Berlusconi took over the annual leadership of the G8 more than a few eyebrows were raised, a reaction often repeated in international fora in the past few years.

Yet, the events of last week remind us that Italy is not all jokes and embarrassments. Mario Draghi, the present governor of the Italian Central Bank, has just been named to succeed Jean-Claude Trichet at the helm of the European Central Bank in a time of difficult transition, economic uncertainty and need for European-wide leadership. The 63-year old roman economist, currently serving as head of the Bank of Italy since 2005 and head of the Financial Stability Board since 2006, has been praised for his “excellent international standing” by the president of the Euro-Group, Jean Claude Juncker, and has quickly moved to becoming the only candidate for the next head of the ECB. As Juncker put it, the Italian has "an excellent international and European reputation" as economist of solid education and firm management skills.

Draghi has received the endorsement of the 17 Euro-area members after talks amongst ministers on May 16, as announced by Belgian Didier Reynders at the end of the summit. The official confirmation now is in the hands of the EU heads of state, which are set to meet in Brussels on June 24—an assent that is at this point almost certain to allow the Italian economist to take the place of the current ECB President Trichet, on November 1, 2011.

Draghi represents an often overlooked, if not forgotten, Italian diplomacy. Educated not solely in one of the country’s key universities, the head of the ECB can showcase a fist-class doctorate in economics from the MIT under the supervision of two Nobel laureates such as Franco Modigliani and Robert Solow, with a seven-year tenure as Executive Director of the World Bank between 1984 and 1990 and a vice-chairmanship at Goldman Sachs in the early-2000s. The international standing of the Bank of Italy governor, drawing on both academia (with a professorship in Florence and several fellowships in the U.S.) and the highest ranks of political economy, has paved his way to the ECB candidature. As chairman of the Financial Stability Board, the Italian has looked after cross-cutting issues concerning global financial risks, as well as chaired the transition from the more informal Financial Stability Forum (since 2006) to the 2009 G-20-sponsored establishment of the board. Previously, at the domestic level and right after his World Bank tenure, Draghi has headed the Italian Treasury for ten years (1991-2001), focusing on major reforms of corporate and financial legislations, as well as again on the international role of major Italian corporations.

The economist now takes over the delicate task of navigating the ECB as the Euro-Group sets to bail-out Portugal’s financial disasters, Greece’s need for further assistance beyond the original 110 billion euro help of 2010, and skyrocketing inflationary pressures in the whole Euro-zone. Not surprisingly, Draghi's open backing for a controlled Euro-zone inflation remains and augmented fiscal strictness has been crucial in garnering support from Germany—consent the governor begun to sow last February when he stated that on questions of economic reform Europeans “should all follow the German example.”

However, the governor’s appointment is also contingent on France’s assent, a support suggested by Sarkozy in the last few days in exchange for a replacement on the ECB executive board. Another Italian, Lorenzo Bini Smaghi, who has been working in Frankfurt since 2005, is likely to step down as Draghi is announced in order to allow a French candidate to take up a seat on the board. Bini Smaghi, another example of a cosmopolitan and quiet Italian diplomat a la Draghi, with a PhD from the University of Chicago and a respectable list of directorships at the Italian Ministry of Economy and Finance, is likely to replace the governor at the head of the Bank of Italy, as Reuters reported on Thursday.

The triangular diplomacy that is likely to take Draghi to the ECB Presidency seems, in this sense miles away from that “very special kind of politics” of the self-professed “peek-a-boo diplomacy” inaugurated by Mr. Berlusconi to “bring down the barriers” between global leaders. Subtle, well-referenced, highly educated and largely cosmopolitan, the quiet economic diplomacy represented by Draghi and Bini Smaghi certainly opens up some hope for Italy to truly play a crucial middle-power role in both Europe and at the G8, beyond pub jokes, gossip, scandals and ridicules. Perhaps, the best compliment, in large contrast to the “Oh, Silvio!” reaction of 2008, came from the German Bild’s endorsement of Draghi as the best ECB President after the withdrawal of then-Bundesbank President Alex Weber from the race, when the newspaper pointed at Draghi as the “most German of all remaining candidates”—quoting a few lines after his pro-German positions. A very different kind of diplomacy indeed.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.

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www.diplomaticourier.com

An Italian at the Head of the European Central Bank

May 19, 2011

It is less and less common nowadays for international audiences to hear the words “diplomacy” and “Italy” spoken in the same sentence. Derailed from the subtle and prudent pursuit of international affairs that still constitutes much of the commonsense stereotype of the diplomat through a series of mishaps, clumsy incidents and poor international standing of some the key figures representing the ‘Bel Paese’, Italian diplomacy has become, at best, an oxymoron.

Certainly crucial in this discredited image is the recognizable imprint of the country’s long-serving leader, Silvio Berlusconi, and the innumerable list of gaffes, jokes and blunders the center-right politician displayed on the international scenario. Perhaps best representing this evolving international feeling towards Italy is German Chancellor Angela Merkel’s reaction to the now famous ‘surprise’ welcome offered by Berlusconi at a Summit in Trieste in 2008: when the Italian head of state hid behind a lamp only to jump in front of a bedazzled Chancellor at the very last minute boasting a macaronic “peek-a-boo”, Mrs. Merkel resorted to a resigned “Oh, Silvio!” in return. Shaky patience, complacent acquiescence and a touch of skepticism has often accompanied the reactions of countless foreign dignitaries when faced with a conduct of foreign relations that so much differs from Sir Ernst Satow’s 1917 prescriptions that illustrated diplomacy as the “application of intelligence and tact” to international relations. When in 2009 Mr. Berlusconi took over the annual leadership of the G8 more than a few eyebrows were raised, a reaction often repeated in international fora in the past few years.

Yet, the events of last week remind us that Italy is not all jokes and embarrassments. Mario Draghi, the present governor of the Italian Central Bank, has just been named to succeed Jean-Claude Trichet at the helm of the European Central Bank in a time of difficult transition, economic uncertainty and need for European-wide leadership. The 63-year old roman economist, currently serving as head of the Bank of Italy since 2005 and head of the Financial Stability Board since 2006, has been praised for his “excellent international standing” by the president of the Euro-Group, Jean Claude Juncker, and has quickly moved to becoming the only candidate for the next head of the ECB. As Juncker put it, the Italian has "an excellent international and European reputation" as economist of solid education and firm management skills.

Draghi has received the endorsement of the 17 Euro-area members after talks amongst ministers on May 16, as announced by Belgian Didier Reynders at the end of the summit. The official confirmation now is in the hands of the EU heads of state, which are set to meet in Brussels on June 24—an assent that is at this point almost certain to allow the Italian economist to take the place of the current ECB President Trichet, on November 1, 2011.

Draghi represents an often overlooked, if not forgotten, Italian diplomacy. Educated not solely in one of the country’s key universities, the head of the ECB can showcase a fist-class doctorate in economics from the MIT under the supervision of two Nobel laureates such as Franco Modigliani and Robert Solow, with a seven-year tenure as Executive Director of the World Bank between 1984 and 1990 and a vice-chairmanship at Goldman Sachs in the early-2000s. The international standing of the Bank of Italy governor, drawing on both academia (with a professorship in Florence and several fellowships in the U.S.) and the highest ranks of political economy, has paved his way to the ECB candidature. As chairman of the Financial Stability Board, the Italian has looked after cross-cutting issues concerning global financial risks, as well as chaired the transition from the more informal Financial Stability Forum (since 2006) to the 2009 G-20-sponsored establishment of the board. Previously, at the domestic level and right after his World Bank tenure, Draghi has headed the Italian Treasury for ten years (1991-2001), focusing on major reforms of corporate and financial legislations, as well as again on the international role of major Italian corporations.

The economist now takes over the delicate task of navigating the ECB as the Euro-Group sets to bail-out Portugal’s financial disasters, Greece’s need for further assistance beyond the original 110 billion euro help of 2010, and skyrocketing inflationary pressures in the whole Euro-zone. Not surprisingly, Draghi's open backing for a controlled Euro-zone inflation remains and augmented fiscal strictness has been crucial in garnering support from Germany—consent the governor begun to sow last February when he stated that on questions of economic reform Europeans “should all follow the German example.”

However, the governor’s appointment is also contingent on France’s assent, a support suggested by Sarkozy in the last few days in exchange for a replacement on the ECB executive board. Another Italian, Lorenzo Bini Smaghi, who has been working in Frankfurt since 2005, is likely to step down as Draghi is announced in order to allow a French candidate to take up a seat on the board. Bini Smaghi, another example of a cosmopolitan and quiet Italian diplomat a la Draghi, with a PhD from the University of Chicago and a respectable list of directorships at the Italian Ministry of Economy and Finance, is likely to replace the governor at the head of the Bank of Italy, as Reuters reported on Thursday.

The triangular diplomacy that is likely to take Draghi to the ECB Presidency seems, in this sense miles away from that “very special kind of politics” of the self-professed “peek-a-boo diplomacy” inaugurated by Mr. Berlusconi to “bring down the barriers” between global leaders. Subtle, well-referenced, highly educated and largely cosmopolitan, the quiet economic diplomacy represented by Draghi and Bini Smaghi certainly opens up some hope for Italy to truly play a crucial middle-power role in both Europe and at the G8, beyond pub jokes, gossip, scandals and ridicules. Perhaps, the best compliment, in large contrast to the “Oh, Silvio!” reaction of 2008, came from the German Bild’s endorsement of Draghi as the best ECB President after the withdrawal of then-Bundesbank President Alex Weber from the race, when the newspaper pointed at Draghi as the “most German of all remaining candidates”—quoting a few lines after his pro-German positions. A very different kind of diplomacy indeed.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.